Mcafee Inc v. Agilysys Inc

• Decision Date: 26 August 2010
• Docket Number: No. 05-08-01168-CV.,05-08-01168-CV.
• Citation: 316 S.W.3d 820
• Parties: McAFEE, INC., Appellant,v.AGILYSYS, INC., Appellee.
• Court: Texas Court of Appeals

316 S.W.3d 820

Court of Appeals of Texas,

Dallas.

McAFEE, INC., Appellant,v.AGILYSYS, INC., Appellee.

No. 05-08-01168-CV.

July 21, 2010.

Rehearing Overruled Aug. 26, 2010.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Mark A. Shank, Vanessa Jean Rush, Gruber Hurst Johansen & Hail LLP, Dallas, TX, for Appellant.

Robert M. O'Boyle, Strasburger & Price LLP, Austin, TX, for Appellee.

Before Justices O'NEILL, LANG-MIERS, and MYERS.

OPINION

Opinion By Justice MYERS.

McAfee, Inc. appeals the summary judgment on its claims in favor of Agilysys, Inc. McAfee brings two issues asserting the trial court erred (1) by granting Agilysys's motion for summary judgment and (2) by awarding Agilysys court costs and considering awarding Agilysys attorney's fees. We reverse the trial court's judgment in part and affirm in part, and we remand the cause to the trial court for further proceedings.

BACKGROUND

In 1997, McAfee and Agilysys's predecessors ¹ signed an agreement called the Systems Integration Purchase Agreement. Under this agreement, Agilysys agreed to oversee the manufacturing, shipping, servicing, and support for McAfee's products to McAfee's customers. The agreement was supplemented by “Statement[s] of Services & Expectations.”

The issue in this case is Agilysys's responsibility for extended warranties. The Statement of Services and Expectations contained a warranty provision stating Agilysys provided a thirty-day warranty from the date of shipping and that any manufacturer's warranties were passed on to McAfee. The Statement also said that although Agilysys itself did not provide extended-warranty services or on-site repairs, it had an agreement with another company, Barrister GIS, to provide extended warranties and repairs, and that it “outsourced” the warranty service to Barrister.

McAfee purchased many extended warranties from Agilysys that were “outsourced” to Barrister. Barrister invoiced Agilysys for the warranties, and Agilysys billed McAfee, but for a greater amount than Barrister charged. During the course of McAfee and Agilysys's business relationship, McAfee paid Agilysys over $900,000 for extended warranties, and Agilysys retained over $300,000 from McAfee's purchases of the extended warranties. Agilysys's vice president and corporate counsel, Rita Thomas, testified in her deposition that the additional revenues were to cover Agilysys's administrative costs for the Barrister warranties and “in taking a little profit.”

In August 2004, McAfee stopped using Agilysys to provide its products, and in March 2005, McAfee and Agilysys signed a settlement and release agreement terminating all their agreements except for specifically named agreements. The agreements extending beyond the release included the warranties for any products purchased by McAfee from Agilysys.

On August 29, 2005, Hurricane Katrina destroyed Barrister's repair facilities in Louisiana. Barrister was unable to provide its warranty services thereafter. Agilysys denied it had any continuing responsibility for the pre-paid extended warranties. In March 2007, McAfee sued Agilysys and Barrister. McAfee later nonsuited all its claims against Barrister.

McAfee's claims against Agilysys included breach of contract, breach of fiduciary duty, money had and received, unjust enrichment, and promissory estoppel.² McAfee sought damages of either the amount it expended to repair the broken units or the amount it prepaid for the warranties in effect in August 2005. Agilysys moved for summary judgment, asserting that as a matter of law it had no duty to McAfee for the prepaid extended warranties and that McAfee had no evidence to support its claims. The trial court granted Agilysys's motion for summary judgment and rendered a take-nothing judgment against McAfee on its claims.

CHOICE OF LAW

The Systems Integration Purchase Agreement provided, “This Agreement shall be governed and construed in accordance with the laws of the state of Ohio.” McAfee contends the law of Ohio applies to this case, and Agilysys does not dispute the validity of the choice-of-law provision. Generally, courts apply the parties' choice of law provided the law of the chosen state bears some reasonable relationship to the parties and the transaction. See DeSantis v. Wackenhut, 793 S.W.2d 670, 677-78 (Tex.1990); Lockheed Martin Corp. v. Gordon, 16 S.W.3d 127, 133-34 (Tex.App.-Houston [1st Dist.] 2000, pet. denied). In applying a contractual choice-of-law provision, Texas courts apply the substantive law of the choice-of-law provision but apply Texas law to matters of remedy and procedure. Autonation Direct.com, Inc. v. Thomas A. Moorehead, Inc., 278 S.W.3d 470, 472 (Tex.App.-Houston [14th Dist.] 2009, no pet.). Procedure includes standards of review. Id.

Agilysys is an Ohio corporation, and the Systems Integration Purchase Agreement stated that the address of the Agilysys predecessor that signed the Agreement was in Ohio. The substantive laws of Ohio and Texas at issue in this case are consistent, so application of either state's substantive law leads to the same result.

SUMMARY JUDGMENT

In its first issue, McAfee asserts the trial court erred in granting Agilysys's motions for summary judgment because Agilysys failed to establish as a matter of law that it had no liability for Barrister's failure to provide the extended-warranty services or a genuine issue of material fact exists regarding Agilysys's liability.

Standard of Review

The standard for reviewing a traditional summary judgment is well established. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985); Private Mini Storage Realty, L.P. v. Larry F. Smith, Inc., 304 S.W.3d 854, 858 (Tex.App.-Dallas 2010, no pet.). Defendants who move for summary judgment must show the plaintiffs have no cause of action. Defendants may meet this burden by either disproving at least one essential element of each theory of recovery or conclusively proving all elements of an affirmative defense. Wornick Co. v. Casas, 856 S.W.2d 732, 733 (Tex.1993). A matter is conclusively established if ordinary minds cannot differ as to the conclusion to be drawn from the evidence. Triton Oil & Gas Corp. v. Marine Contractors & Supply, Inc., 644 S.W.2d 443, 446 (Tex.1982). After the movants have established a right to summary judgment, the burden shifts to the nonmovants to present evidence creating a fact issue. Denson v. Dallas County Credit Union, 262 S.W.3d 846, 849 (Tex.App.-Dallas 2008, no pet.). When multiple grounds for summary judgment are raised and the trial court does not specify the ground or grounds relied upon for its ruling, the appellate court will affirm the summary judgment if any of the grounds advanced in the motion are meritorious. Carr v. Brasher, 776 S.W.2d 567, 569 (Tex.1989); Red Roof Inns, Inc. v. Murat Holdings, L.L.C., 223 S.W.3d 676, 684 (Tex.App.-Dallas 2007, pet. denied).

We review a no-evidence summary judgment under the same legal sufficiency standard used to review a directed verdict. See Tex.R. Civ. P. 166a(i); Flood v. Katz, 294 S.W.3d 756, 762 (Tex.App.-Dallas 2009, pet. denied). Thus, we must determine whether the nonmovant produced more than a scintilla of probative evidence to raise a fact issue on the material questions presented. See Flood, 294 S.W.3d at 762. When analyzing both traditional and no-evidence summary judgments, we consider all the evidence in the light most favorable to the nonmovant, indulging every reasonable inference and resolving any doubts against the movant. Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex.2006) (quoting City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex.2005)). A no-evidence summary judgment is improperly granted if the respondent brings forth more than a scintilla of probative evidence to raise a genuine issue of material fact. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex.2003). “More than a scintilla of evidence exists when the evidence rises to a level that would enable reasonable, fair-minded persons to differ in their conclusions.” Id. (quoting Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.1997)). “Less than a scintilla of evidence exists when the evidence is ‘so weak as to do no more than create a mere surmise or suspicion’ of a fact.” Id. (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983)).

Breach of Contract

McAfee asserts the trial court erred in granting Agilysys's motion for summary judgment on McAfee's breach-of-contract cause of action. The essential elements of a breach-of-contract claim are (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained as a result of the breach. Jarupan v. Hanna, 173 Ohio App.3d 284, 878 N.E.2d 66, 73 (2007); B & W Supply, Inc. v. Beckman, 305 S.W.3d 10, 16 (Tex.App.-Houston [1st Dist.] 2009, pet. denied). Neither party disputes the validity of the contract. McAfee presented some evidence that it performed by paying for the optional-cost extended warranties, and that it sustained damages. The disputed issue is whether the defendant, Agilysys, breached the contract.

When construing a contract, our primary goal is to determine the parties' intent as expressed in the terms of the contract. Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 797 N.E.2d 1256, 1261 (2003); Chrysler Ins. Co. v. Greenspoint Dodge of Houston, Inc., 297 S.W.3d 248, 252 (Tex.2009); Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). Contract language that can be given a certain or definite meaning is not ambiguous and is construed as a matter of law. Chrysler Ins. Co., 297 S.W.3d at 252; Coker, 650 S.W.2d at 393; see Westfield Ins. Co., 797 N.E.2d at 1261. A contract is ambiguous when its meaning is uncertain and doubtful or it is reasonably susceptible to more than one meaning. Weiss v. St. Paul Fire & Marine Ins. Co., 283 F.3d 790, 796 (6th Cir.2002) (applying Ohio law); Coker, 650 S.W.2d at 393; United...